President Donald Trump has apparently adopted a policy aimed at ramping up the production of corn ethanol. This is a destructive idea because the ethanol mandate was established in 2005 when America seemed to be running low on oil and natural gas. Since then, thanks largely to shale technology, we are now the world’s largest producer of oil and gas.
The ethanol mandate has become the poster child for a government program run amok. It is essentially a way for the government to get consumers to use a product it subsidizes with mandates, tax credits and tariffs.
Most gasoline contains ethanol of 10%. Some gas stations sell gasoline with 15% ethanol now, but only cars engineered for that mix can use it.
This is bad for consumers, because ethanol is more expensive than regular gasoline and contains one-third less energy. If not for a subsidy of 51 cents a gallon, along with mandates requiring an increase in ethanol use, the ethanol industry would have gone bankrupt long ago.
What’s particularly remarkable about the decision to increase ethanol production is that it seems disconnected not only from the real needs of the nation’s economy, but also from the administration’s own economic policies. Forcing consumers to use biofuels is the opposite of the free-market conservatism that Mr. Trump usually espouses
The ethanol industry has seen the biofuels mandate balloon from 4 billion gallons of corn ethanol in 2005 to 15 billion gallons this year. Mr. Trump has proposed boosting the mandate to 16 billion gallons or more in 2020 while also ensuring that a gasoline blend of 15% ethanol is readily available at all gas stations year-round.
But only two months ago the White House was prepared to decrease the ethanol mandate. The Environmental Protection Agency — which administers the ethanol program — granted exemptions to 31 petroleum refineries that allowed them to avoid the expense of mixing ethanol in gasoline. This was good news for the refineries and consumers. But then the administration reversed course and EPA required the use of even more ethanol in the gasoline supply.
This about-face came after Iowa politicians warned the White House it could not count on the farm vote unless it pushes for an expansion of corn ethanol production. Currently, more than 40% of the nation’s corn crop goes toward ethanol production.
Consumers are paying for this market intrusion with increased prices for fuel and food. Diverting increasingly large amounts of the U.S. corn crop away from food products — from the corn we eat, beef, eggs and corn syrup — drives up food prices. Studies have shown a correlation between increased ethanol use and rising food prices worldwide, straining family budgets. Low-income people who spend a larger share of their earnings on food are impacted the most.
We are also paying a huge price for the environmental harm ethanol causes. The mandate for higher ethanol production has created a huge incentive to grow more corn, with farmers ploughing up grasslands and clearing timberland and other environmentally sensitive areas. Corn production has led to greater use of fertilizers, particularly in the Midwest, resulting in acidic runoff taken down the Mississippi River, turning part of the Gulf of Mexico into a “dead zone” where some fish can’t survive.
There’s also the matter of greenhouse emissions. A large amount of oil and natural gas is required in ethanol production, if you take into account the energy required to run farm machinery, fertilize, harvest and transport the corn to ethanol plants and distill the corn into ethanol. Cut to its core, the evidence shows an increase in greenhouse emissions.
Ethanol is a good deal for ethanol companies and farmers whose crops provide the ingredients for making the fuel. But motorists are paying more to fill up their car tanks. The question is, why should they?
Demand for ethanol has plateaued in recent years, mainly because we don’t need as much gasoline to fuel the increasingly efficient passenger car fleet. Government data shows that U.S. gasoline consumption is at the same level recorded in 2003, even with 45 million more vehicles on the road. Ramping up ethanol production is nonsensical.
We won’t get our energy policy right as long as it unfairly benefits ethanol producers and systematically and unfairly penalizes consumers in the pocketbook — and, by extension, hurts Americans throughout the economy.
J. Winston Porter is an energy and environmental consultant in Savannah, Ga. He is a former assistant administrator of the U.S. Environmental Protection Agency.
First Published: October 29, 2019, 4:00 a.m.